UK retailers and the return problem: How Brexit turned returns into red tape and how to fix it

British retailers are facing mounting challenges when exporting goods to the EU, particularly as a result of UKCA marking requirements and rules of origin. Beyond outbound flows, however, the return of goods across the Channel is also emerging as a significant logistical and financial constraint.

Each time goods cross a border, customs authorities may levy taxes. Since Brexit, when those same products are sent back to the UK, they are often treated as new imports unless retailers can demonstrate that the goods were originally exported (source Internet Retailing)

This creates structural inefficiencies, including the risk of double duties, duplicated administrative processes, and a deterioration in the overall customer experience.

As a result, many UK retailers are scaling back or abandoning EU sales altogether, citing their inability to guarantee smooth and predictable returns, according to Internet Retailing, a media outlet specialising in online and multichannel retail. Its analysis shows that UK footwear and clothing exports to the EU have declined by more than 60%, falling from £7.4 billion in 2019 to £2.7 billion in 2023.

Against the backdrop of multiple post-Brexit regulatory constraints, return management has therefore become a barrier to growth for British retailers.

🔎 Discover rules of origins, the other measure affecting the Retail industry.

In practical terms, a routine return can trigger avoidable charges and delays. For instance, if a customer in Paris returns a pair of shoes due to sizing issues. When the parcel re-enters the UK, French customs may levy duties on the outbound leg, and UK authorities can treat the return as a fresh import unless the retailer can substantiate the goods’ original export, creating avoidable cost, delay, and administrative friction.

Retailers typically refund customers regardless, but the associated taxes and fees can materially compress margins. At scale, across hundreds of returns, profitability can deteriorate rapidly.

Returns are estimated to cost UK retailers approximately £60bn annually (source: Locate2u). In response, some brands have exited EU markets altogether, not due to a strategic shift in demand, but because operational complexity has become a binding constraint.

So far, these challenges are not expected to change soon, and the British government recommends assiduous tracking of your goods to avoid being considered new import.